New MDA guidance to be released soon, ASIC says

After many months of silence, ASIC has now promised it will finalise the new rules around managed discretionary accounts (MDAs) before the current regime expires this year.

In an email seen by ifa, an ASIC spokesperson said the industry can "rest assured" that the proposed changes to MDA regulation will be put into play before the current class order "sunsets" on 1 October.

"The purpose of this email is to provide you with an update on the status of our review of the regulatory requirements for managed discretionary accounts," the spokesperson said.

"As you know, Class Order [04/194] is due to sunset on 1 October 2016. Please rest assured that we will remake the class order and issue new regulatory guidance before it sunsets, taking into account submissions we received on (consultation paper) 200 and feedback from our industry roundtable meetings.

"Where appropriate, we will include suitable transition periods for any new obligations we impose."

ASIC released in March 2013 proposed changes to its guidance and regulation of MDAs, which include revoking temporary "no-action" positions and requiring MDA operators to have a policy on how clients can terminate the account.

The changes were then delayed the following year as ASIC waited for the outcome of the government's Financial System Inquiry and further amendments to the FOFA reforms.

Speaking to ifa, financial services lawyer and The Fold's managing director, Claire Wivell Plater, said the postponement of ASIC's proposed changes has caused "considerable disquiet" in the industry.

"Everyone has been waiting anxiously for what ASIC is going to do with MDAs and we've had no news for a very long time," she said.

"And now we have this situation where the current regime is due to expire in six months, so of course everybody's very nervous."

Ms Wivell Plater added that the uncertainty has prevented many people from offering MDAs.

"There are a lot of people who are wanting to offer MDA services but don't feel confident to do so because there is no certainty around what the regulatory requirements are going to be," she said.

"The industry needs clarity on this."

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